Budgeting is like dieting — when it’s too strict, it quickly
falls apart.

Fortunately, there are simple ways to get around the challenges
linked to budget discipline. Lead by example and teach
your family members to follow these habits and you’ll ensure
their financial stability in any environment.

Here are three tried and tested habits:

1. Save first, ask questions later

This is often the most successful habit for wealth creation.
Saving first means separating a portion of all of
your income as soon as it comes in the door, before anything
else happens. Ten percent is a good amount to save at
first. Store that portion in an investment account or even a
simple savings account.

Why save first? Budgets expand to their limits the same way
gas expands to fill a room. It’s not an official law of
physics, but it very well could be. Make saving first a
habit so that you are free to spend whatever’s left however you
see fit. Reinforce this habit early and often with your family.
(For related reading, see: Pay Yourself First.)

2. Track your spending

Too often we hear people talk about how they have no idea
how much they spend or where they spend it. How can we expect
to make smart spending decisions when we have little to no
insight into our own spending habits?

Fortunately, technology has an easy solution. I recommend using
Quickbooks. Test out creative spending categories like “Social
Meals,” “Self Improvement” and “Family Experiences.” Memory is
a poor storage place when it comes to numbers. Instead,
leverage software to gain insight into your spending
habits, the same way a company would review its profit and
losses on a monthly basis.

3. Make more or spend less?

One well-traveled path to financial stress is regularly
spending more than you make. Competitive type-A personalities
often retort that they solve this issue by simply always making
more than they spend. They’re not wrong — that can work
temporarily.

However, those people often feel that they’re under
considerable pressure to perform. Try out both methods for a
period of time if you’re unsure about committing to one or the
other. (for related reading, see: Downshift to Simplify Your Life.)

Talk about budgeting

It’s easy to find many examples of what works well and what
doesn’t when it comes to budgeting. One of the best ways to
pass on good financial habits to the next generation is to have
regular conversations
about the above habits. Have these conversations
with yourself and your family.